Blend Out Color

For example, if I have a sprite sheet and the background color is pink, how do I draw a section of that sprite sheet so that the pink does not appear when it draws but other objects that may be behind that object will be visible where the pink would have been?

You'll have to convert the pink color key to an alpha channel. OpenGL does not support color keying. Probably easier not to do this at load time. Most image editing programs have tools to help you do this.

That's pretty much what I am gathering from my research. Basically, the best thing is to have an alpha channel as the background. If I don't have alpha as the background, I'll have to manually compare the bits in the image to the key color and set them to black alpha if they match. Am I correct?

Yes, it is always possible that I can't get a proper alpha channel in the image in the first place. I'm not an artist, I'm a programmer and sometimes I may not have the luxury of an artist to make it a certain way. Knowing how to do it is what I need.